In today’s accessible investment world, the bond market stands as a potentially lucrative option for diversification. This guide provides essential information and a step-by-step easy process to buy US Treasuries in the UK – one of the most secure bonds available.
US Treasuries, encompassing Treasury Bonds, Bills, and ETFs, offer UK investors stable returns and dividends while diversifying portfolios. Investing in Treasuries requires selecting a suitable UK trading platform like eToro, regulated by the Financial Conduct Authority (FCA). eToro provides a range of Treasuries catering to various risk appetites. You can easily fund your account with GBP via local payment methods and purchase the desired Treasury asset.
As government-backed securities, US Treasuries are considered among the world’s safest investments. The US government issues these to finance operations and debt. Treasuries are available across durations – 1, 3, 5, 10, 20, 30 years – each with distinct risk-return profiles. Short-term T-Bills offer stability, while long-term T-Bonds present higher yields and volatility.
Best Platform to Buy US Treasuries in the UK
eToro emerges as the optimal UK platform for US Treasuries based on regulation, asset range, intuitive interface, and GBP funding options. Regulated by the FCA, eToro offers short-term bills, mid-term notes, and long-term bonds catering to varied risk appetites.
Step-by-Step Guide to Buy US Treasuries on eToro
Follow this roadmap to purchase your chosen Treasury efficiently:
Step 1) Open & Verify eToro Account
Register on eToro.com and complete identity verification by uploading your passport/ID and proof of address.
Step 2) Deposit GBP Funds
Click ‘Deposit Funds’ and select ‘GBP’ as your currency. Choose your preferred payment method like Faster Payments, BACS, or debit card to transfer money.
Step 3) Search for Treasury
Use the search bar to find your desired Treasury ETF, Bond, or Bill. Options include SPDR 1-3 Month T-Bill ETF (BIL) and iShares 20+ Year Treasury Bond ETF (TLT).
Step 4) Select Treasury & Set Order
Choose your preferred Treasury based on risk and duration. Then set order details like market/limit and number of shares.
Step 5) Review & Confirm Order
Verify order specifics like asset type, quantity, price, fees. Click ‘Open Trade’ once you’ve confirmed details.
Step 6) Monitor Investment
Check your Treasury investment’s performance periodically. Stay updated on associated news and market events.
Fees for Buying US Treasuries on eToro
eToro levies no commission on Treasury trades but charges conversion fees for deposit/withdrawals in non-USD currency. Other costs include:
- Market Spread – Difference between bid and ask prices. Varies for each Treasury.
- Overnight Fees – For keeping leveraged CFD positions open overnight.
- Weekend Fees – Triple the overnight fees charged on Fridays.
Best US Treasury ETFs for UK Investors
Selecting the optimal US Treasury ETF depends on your financial objectives, risk tolerance, and personal circumstances. ETFs target various points of the yield curve – from T-Bills to T-Bonds – each carrying distinct risk-return profiles.
Some recommended US Treasury ETFs for consideration:
SPDR Bloomberg 1-3 Month T-Bill ETF (BIL) – Best for low-risk investors, holding short-term U.S. T-Bills maturing in 1-3 months. Yielded 5.15% as of August 2023 making it suitable for stability-focused investors.
iShares 1-3 Year Treasury Bond ETF (SHY) – Holds Treasuries with 1-3 year maturities, balancing yield and interest rate fluctuations. Offered 4.88% dividend yield as of August 2023, presenting an reasonable risk-return balance.
iShares 20+ Year Treasury Bond ETF (TLT) – Targets long-term 20+ year T-Bonds, catering to investors with higher risk tolerance given greater price volatility. Compensates with higher 4.25% yields as of August 2023.
Vanguard Intermediate-Term Treasury ETF (VGIT) – Owns mid-term maturity Treasuries, around 5-10 years, blending stability and decent yields. Delivered 4.34% yields in August 2023, making it a moderate option.
You can pick currency-hedged or unhedged ETF versions fitting your currency outlook and sensitivities. Consulting a financial advisor and researching extensively helps make informed selections aligned to your investment goals.
Taxes on US Treasuries for UK Investors
As per UK taxation laws, income from US Treasuries is subject to Income Tax. Capital Gains Tax applies if you sell Treasuries for substantial profit. Always consult a tax advisor when investing.
In conclusion, investing in US Treasuries as a UK resident involves picking a trusted platform like eToro, funding your account with GBP, choosing your preferred Treasury based on risk tolerance, and placing informed buy orders. Monitoring your investment and keeping up with financial developments is key to managing Treasuries optimally.
How do I invest in US Treasury bonds in the UK?
You can invest in US Treasury bonds from the UK by opening a trading account with FCA-regulated platforms like eToro. Fund your account, search for the desired Treasury bond ETF, and place a buy order for the number of shares you want.
Can I buy Treasury bills in UK?
Yes, UK investors can buy US Treasury bills by using reputable trading platforms like eToro and Saxo Bank. These provide access to short-term US T-bills with maturities of 4, 8, 13, 26, and 52 weeks.
Are US Treasuries taxable in the UK?
Income and capital gains from US Treasuries are taxable for UK residents. Interest income is subject to Income Tax while substantial profits from selling Treasuries incur Capital Gains Tax. Always consult a tax advisor when investing in Treasuries.
Can I buy US Treasuries directly?
No, you cannot directly buy Treasuries from the US Treasury Department as a UK retail investor. You need to purchase them through approved trading platforms or brokers that provide access to these securities for international investors.